Zain Group Financial Results

Q4 2019

Disclaimer ❖ Mobile Telecommunications Company KSCP “Zain Group” has prepared this presentation to the

best of its abilities, however, no warranty or representation, express or implied is made as to theadequacy, correctness, completeness or accuracy of any numbers, statements, opinions,estimates, or other information contained in this presentation.

❖ Certain portions of this document contain “forward-looking statements”, which are based oncurrent expectations and reasonable assumptions, we can however give no assurance they will beachieved.

❖ The information contained in this presentation is subject to change and we disclaim any obligationto update you of any such changes, particularly those pertaining to the forward-lookingstatements.

❖ Furthermore, it should be noted that there are a myriad potential risks, uncertainties andunforeseen factors that could cause the actual results to differ materially from the forward-lookingstatements made herein.

❖ Accordingly, this presentation does not constitute an offering of securities or otherwise constitutean invitation or inducement to any person to underwrite, subscribe for, or otherwise acquire ordispose of, securities in any company within Zain Group.

For further information about Zain Group, or the materials contained within this presentation, pleasedirect your enquiries to our Investor Relations team via email at IR@zain.com or visitwww.zain.com/en/investor-relations/

2

Content

1. Results Review

2. Operations review

3. Financial Statements

Zain At A Glance – 2019

49.5MILLION

ACTIVE CUSTOMERS

15.7MILLION

CUSTOMERSIN IRAQ

OVER

7,200EMPLOYEES

MARKETLEADER

IN KUWAIT, IRAQ,REPUBLIC OF SUDAN, JORDAN & LEBANON

$2.4BILLION

IN EBITDA

15.9MILLION

CUSTOMERSIN REPUBLICOF SUDAN

$5.5BILLIONIN REVENUE

10,258 TBAVERAGE

DAILY DATA VOLUME

1

$715MILLION

IN NETINCOME

44%EBITDA MARGINONE OF THE

HIGHEST IN THE REGION

4

5G KUWAIT

SAUDI ARABIA

4GLONG TERM

EVOLUTION(LTE) NETWORK

IN JORDAN, BAHRAIN, SUDAN & LEBANON

The World of Zain – 2019

IRAQOwnership: 76% Revenue: $1.1 bnCustomers: 15.7 mPrepaid: 97%

Market Share: 52%

KUWAITOwnership: 100%

Revenue: $1.1 bnCustomers: 2.8 mPrepaid: 64%

Market Share: 38%

BAHRAINOwnership: 55.4% Revenue: $167 m

SAUDI ARABIAOwnership: 37.05% Revenue: $2.2 bnCustomers: 7.6 mPrepaid: 41%

MOROCCOOwnership: 15.5%

LEBANONOwnership: Management Contract Customers: 2.3 mPrepaid: 86%

JORDANOwnership: 96.52%

Revenue: $496 m

Customers: 3.6 mPrepaid: 75%

Market Share: 35%

SUDANOwnership: 100% Revenue: $304 m Customers: 15.9 mPrepaid: 98%

Market Share: 49%

SOUTH SUDANOwnership: 100%Customers: 991kPrepaid: 99%

* exclusive of Morocco, in which Zain

has a 15.5% ownership in the mobile

operator “INWI”

ZAIN’S WORLD CATERS TO 49.5 MILLION CUSTOMERS IN 8 COUNTRIES*

5

Group Financial Highlights – Q4 2019

196211

Q4-18 Q4-19

642 629

Q4-18 Q4-19

1,3551,447

Q4-18 Q4-19

CUSTOMERS (000)

47% 43%

5 5

REVENUE (USDm)

EBITDA (USDm) NET INCOME (USDm)

48,993 49,521

31 Dec 2018 31 Dec 2019

+1% +7%

-2%

Margin

%

+8%

6

EPS

(Cent)

Group Financial Highlights – 2019

649715

2018 2019

1,717

2,400

2018 2019

4,362

5,471

2018 2019

CUSTOMERS (000)

39% 44%15 17

REVENUE (USDm)

EBITDA (USDm) NET INCOME (USDm)

48,993 49,521

31 Dec 2018 31 Dec 2019

+1% +26%

+40%

Margin

%

+10%

7

EPS

(Cent)

445

618

806

13% 14%15%

2017 2018 2019

Capex Capex / Revenue

+39% +30%

CAPEX & CAPEX / REVENUE

8

* 2018 Capex includes Zain KSA Capex from Q3 2018 onwards

* 2017 Capex is excluding Zain KSA

* Capex includes only tangible assets

US

D m

illi

on

Iraq17%

Jordan5%

S. Sudan1%

Republic of Sudan

7%Bahrain2%

KSA41%

Kuwait26%

Other1%

CAPEX BREAKDOWN

* Group Total Capex = USD 806 million

*Total CAPEX

$806m

Kuwait 209.4 19%

KSA 333.2 15%

Iraq 133.0 12%

Jordan 43.2 9%

Sudan 51.4 17%

Bahrain 16.7 10%

S. Sudan 8.1 15%

Other 11.4 N/A

OPCO2019

(USDm)

% OF

REVENUE

TOTAL CAPEX

9

* Capex includes only tangible assets

4,185

4,979

1,362 595

2018 2019

Long Term Short Term

4,718 4,791

2.3 2.2

2018 2019

Net Debt Net Debt/EBITDA

Net Debt = Total interest bearing debt (including letters of guarantee)

after deducting cash and cash equivalents

TOTAL DEBT (USDm) NET DEBT (USDm) & NET DEBT/EBITDA

5,574

5,547

Group Financial Highlights

10

Kuwait6%

Republic of Sudan

32%

Jordan7%

S.Sudan2%

KSA15%

Bahrain1% Iraq

32%

Lebanon5%

Jordan9%

Kuwait20%

Others1%

KSA41%

Republic of Sudan

6%

Iraq20%

Bahrain3%

Group Customers

49.5m

REVENUE CONTRIBUTION CUSTOMER CONTRIBUTION

Group Revenues

$5.5B

Group Financial Highlights – 2019

11

80% 76%

87%95%

66%

2014 2015 2016 2017 2018

8% 8%

7%

8%

6%

2014 2015 2016 2017 2018

40

30

35 35

30

2014 2015 2016 2017 2018

533

388447

506

427

2014 2015 2016 2017 2018

DIVIDEND PAYOUT RATIO DIVIDEND YIELD (%)

DIVIDEND PER SHARE (Fils) CASH DIVIDEND (USDm)

ZAIN DIVIDENDS

12

Content

1. Results Review

2. Operations review

3. Financial Statements

$25ARPU

174%Penetration

1983Year of launch

2.8 mCustomers

100%Ownership

▪ Solid FY results (Revenue up 1%, EBITDA up 10% and Net Income up 1.2%)

▪ Excluding the MEW and bulk sale in 2018, revenue would have grown by 7%

▪ Increase in EBITDA is due to improved gross margins and IFRS-16 benefits

▪ Strong concentration on cost optimization initiatives

▪ Data revenue grew 7% YoY, and formed 37% of total revenue

▪ 5G network expansion continues, with total planned sites to reach 2K by Q1 2020

▪ Sale of 1,620 towers completed in Feb 2020 for $130m (~$43m net accounting gain)

ZAIN38%

OOREEDOO31%

VIVA31%

5GTechnology

100%Coverage

2,511Number of sites

265280

103 9472

56

Q4-18 Q4-19

FINANCIALS (USDm)

Zain38%

Ooredoo35%

Viva27%

MARKET SHARE

38%EBITDA Margin

ZAIN KUWAIT

14

1,098 1,098

381 417

272 273

2018 2019

Revenue EBITDA Net Income

$20ARPU

127%Penetration

7.6 mCustomers

37%Ownership

ZAIN38%

OOREEDOO31%

VIVA31%

5GTechnology

99%Coverage

9,726Number of sites

547595

293260

107

28

Q4-18 Q4-19

46%EBITDA Margin

▪ Another record year, recording highest financial results since inception

▪ Revenue increased 12% YoY, driven by the revamped postpaid consumer products

and major focus remains on the enterprise B2B segment

▪ New revenue streams (FTTH, DIA and IBS)

▪ Benefits from Regulatory agreements (CITC waiver)

▪ Data revenue formed 43% of total revenue

▪ Total early voluntary repayment towards the senior Murabaha amounted SAR 1.425

billion in the past 18 months

▪ Settled the ICBC facility in full from the proceeds of the SAR 2.25 billion Murabaha

Junior Credit facility

2008Year of acquisition

FINANCIALS (USDm)

ZAIN KSA

15

2,0112,240

8041,021

89 130

2018 2019

Revenue EBITDA Net Income

$6ARPU

101%Penetration

2003Year of acquisition

15.7 mCustomers

76%Ownership

ZAIN38%

OOREEDOO31%

VIVA31%

3GTechnology

100%Coverage

4,807Number of sites

287 286

115130

15 26

Q4-18 Q4-19

Zain52%

Asiacell48%

MARKET SHARE

43%EBITDA Margin

▪ The period saw intense competition which impacted the top line

▪ IFRS 16 adoption and strong focus on cost transformation initiatives

benefited EBITDA

▪ Robust growth in enterprise (B2B) segment

▪ Ongoing lobbying for the 4G license

▪ Benefit of 5 year extension of 2G and 3G license, effective August 2022

FINANCIALS (USDm)

ZAIN IRAQ

16

1,1401,078

423 465

49 63

2018 2019

Revenue EBITDA Net Income

$10ARPU

80%Penetration

2003Year of launch

3.6 mCustomers

96.52%Ownership

ZAIN38%

OOREEDOO31%

VIVA31%

4GTechnology

100%Coverage

2,950Number of sites

125 128

4653

16 17

Q4-18 Q4-19

Zain35%

Orange33%

Umniah32%

MARKET SHARE

45%EBITDA Margin

▪ Solid FY results (Revenue up 0.4%, EBITDA up 14% and Net Income up 5%)

▪ reduction in interconnection rates (from 11.6 fils to 8.4 fils)

▪ Lower Opex (lower utilities cost) and new IFRS 16 benefits.

▪ Data revenues grew by 8% YoY, and formed 41% of total revenue.

▪ Fiber rollout continues in 2019 resulting an increase in FTTH revenue

▪ Opening of Nuclear grade data center (The Bunker) offering co-location,

Cloud, virtual private data center and Business continuity services.

FINANCIALS (USDm)

ZAIN JORDAN

17

494 496

194221

73 77

2018 2019

Revenue EBITDA Net Income

$2ARPU

76%Penetration

15.9 mCustomers

100%Ownership

ZAIN38%

OOREEDOO31%

VIVA31%

4GTechnology

90%Coverage

2,691Number of sites

2,934

3,917

941

1,522

53

629

Q4-18 Q4-19

Zain49%

Sudani24%

MTN27%

MARKET SHARE

40%EBITDA Margin

2006Year of acquisition

▪ Impressive FY results in local currency SDG terms

▪ The political situation witnessed some signs of stability after forming a

civilian-led government for a transitional period of three years

▪ Customer base grew by 9%, to reach 15.9 million

▪ ~30% currency devaluation affected the financial results in USD terms

(from an average of 31.9 in 2018 to 45.8 SDG/USD in 2019)

▪ Significant cost optimization savings

▪ Data revenues grew 41% YoY, and formed 18% of total revenue

FINANCIALS (SDGm)

ZAIN SUDAN

18

9,731

13,895

3,650

5,557

1,2062,256

2018 2019

Revenue EBITDA Net Income

$18ARPU

132%Penetration

2003Year of launch

55%Ownership

4GTechnology

100%Coverage

597Number of sites

46 45

1114

4 4

Q4-18 Q4-19

33%EBITDA Margin

▪ EBITDA jumped by 35% mainly due to the IFRS 16 benefits

▪ Net Income increased by 2% YoY, supported by the decrease in

regulatory charges

▪ Data revenue formed 47% of total revenue

▪ New CEO appointed in Feb 2020

▪ 5G to be commercially launched in H1 2020

FINANCIALS (USDm)

ZAIN BAHRAIN

19

176167

4156

14 14

2018 2019

Revenue EBITDA Net Income

68%Penetration

2004Year of acquisition

2.3 mCustomers

MCOwnership

ZAIN38%

OOREEDOO31%

VIVA31%

4GTechnology

99%Coverage

1,366Number of sites

Touch54%

Alfa46%

MARKET SHARE

▪ Zain operates in Lebanon under a management contract since June 2004,

when it was rebranded to mtc-touch, and subsequently to “touch”

TOUCH - LEBANONManagement Contract

20

Content

1. Results Review

2. Operations review

3. Financial Statements

Statement of Financial Position

22

2019 2018

Restated

KD ’000

ASSETS

Current assets

Cash and bank balances 296,985 311,916

Trade and other receivables 555,398 521,534

Contract assets 66,889 66,062

Inventories 48,513 45,957

Investment securities at fair value through profit or loss 8,540 15,519

Assets of disposal group classified as held for sale 17,611 7,656

993,936 968,644

Non-current assets

Contract assets 28,134 16,940

Investment securities at FVOCI 6,360 7,040

Investments in associates and joint venture 72,612 69,851

Other non-current assets 64,669 68,755

Right of use of assets 181,052 -

Property and equipment 1,229,291 1,193,222

Intangible assets and goodwill 2,160,039 2,192,218

3,742,157 3,548,026

Total Assets 4,736,093 4,516,670

2019 2018

Restated

KD ’000

LIABILITIES AND EQUITY

Current liabilities

Trade and other payables 857,512 952,638

Deferred revenue 98,495 105,308

Liabilities of disposal group classified as held for sale 5,397 -

Income tax payables 61,775 11,863

Due to banks 180,274 412,971

Lease liabilities 42,795 -

1,246,248 1,482,780

Non-current liabilities

Due to banks 1,218,450 1,033,565

Lease liabilities 144,278 -

Other non-current liabilities 448,518 336,325

1,811,246 1,369,890

Equity

Attributable to the Company’s shareholders

Share capital 432,706 432,706

Share premium 1,707,164 1,707,164

Legal reserve 216,354 216,353

Foreign currency translation reserve (1,371,841) (1,367,018)

Investment fair valuation reserve (1,088) 864

Other reserves (3,044) (4)

Retained earnings 318,509 287,143

1,298,760 1,277,208

Non-controlling interests 379,839 386,792

Total equity 1,678,599 1,664,000

Total Liabilities and Equity 4,736,093 4,516,670

Statement of Profit or Loss

23

2019 2018

Earnings per share (EPS)

Basic and diluted – Fils 50 45

2019 2018

KD ’000

Revenue 1,660,890 1,317,613

Cost of sales (459,135) (375,517)

Operating and administrative expenses (434,436) (409,996)

Depreciation and amortization (375,954) (229,532)

Expected credit loss on financial assets (ECL) (38,886) (13,188)

Interest income 7,098 18,320

Investment income 1,007 3,930

Share of results of associates and joint venture 2,762 (2,444)

Other income/ (expenses) 38,955 (41,696)

Gain on business combination - 30,931

Finance costs (110,723) (69,173)

Provision for impairment loss on property and equipment - (9,648)

Loss from currency revaluation (13,058) (14,764)

Net monetary gain 5,074 46,935

Profit before contribution to KFAS, NLST, Zakat, income taxes and Board of Directors’ remuneration

283,594 251,771

Contribution to Kuwait Foundation for Advancement of Sciences (2,200) (1,667)

National Labour Support Tax and Zakat (7,082) (4,476)

Income tax expenses and other levies (25,253) (19,752)

Board of Directors’ remuneration (510) (420)

Profit for the year 248,549 225,456

Attributable to:

Shareholders of the Company 216,928 196,500

Non-controlling interests 31,621 28,956

248,549 225,456

24

Statement of Cash Flows2019 2018

KD ‘000

Cash flows from operating activities

Profit for the year before income tax, KFAS, NLST, and Zakat 283,084 251,351

Adjustments for:

Depreciation and amortization 375,954 229,532

ECL on financial assets 38,886 13,188

Interest income (7,098) (18,320)

Investment income (1,007) (3,930)

Share of results of associates and joint venture (2,762) 2,444

Other income/ (expenses) (38,955) 41,696

Gain on business combination - (30,931)

Finance costs 110,723 69,173

Provision for impairment loss on property and equipment - 9,648

Loss from currency revaluation 13,058 14,764

Net monetary gain (5,074) (46,935)

Loss on sale of property and equipment 1,400 202

Operating profit before working capital changes 768,209 531,882

Increase in trade and other receivables (99,916) (84,716)

Increase in inventories (243) (3,730)

Increase in trade and other payables and deferred revenue 4,495 70,706

Cash generated from operations 672,545 514,142

Payments:

Income tax (16,614) (10,629)

Kuwait Foundation for Advancement of Sciences (KFAS) (771) (319)

National Labour Support Tax and Zakat (3,349) (5,492)

Net cash from operating activities 651,811 497,702

2019 2018

KD ‘000

Cash flows from investing activities

Deposits maturing after three months and cash at bank under lien

(7,403) 30,286

Proceeds from sale of investment securities 7,916 1,919

Investments in securities (325) (4,132)

Increase in dues from associates - (7,039)

Acquisition of property and equipment (net) (282,799) (173,837)

Acquisition of intangible assets (net) (33,417) (43,977)

Net cash on acquisition of subsidiaries (11,703) 101,993

Interest received 5,749 6,028

Dividends received 383 253

Net cash used in investing activities (321,599) (88,506)

Cash flows from financing activities

Proceeds from bank borrowings 540,727 203,019

Repayment of bank borrowings (587,387) (288,901)

Repayment of lease liabilities (59,114) -

Dividends paid to Company’s shareholders (129,705) (151,017)

Dividends paid to minority shareholders of subsidiaries (5,047) (1,569)

Finance costs paid – due to banks (112,438) (52,966)

Net cash used in financing activities (352,964) (291,434)

Net (decrease)/ increase in cash and cash equivalents (22,752) 117,762

Effects of exchange rate changes on cash and cash equivalents

418 (13,461)

Transition adjustment on adoption of IFRS 9 - (6,497)

Cash and cash equivalents at beginning of year 304,236 206,432

Cash and cash equivalents at end of year 281,902 304,236

THANK YOU

Website : zain.com

Email : IR@zain.com

Note: Mobile Penetration rates are sourced from GSMA Intelligence